Overview of the Employer Benefits of the FFCR Act
Originally published by: Clark Schaefer Hackett — March 25, 2020
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Emergency Family Medical Leave (EFML) Tax Credit
Any amount paid by an employer under EFML is eligible for a 100% refundable tax credit, equal to 100% of the qualified emergency family leave wages required to be paid by the Emergency Family and Medical Leave Expansion Act. The credit is claimed against the tax imposed by section 3111(a) (the employer portion of the Social Security taxes) each calendar quarter through the IRS Form 941. The amount of qualified leave wages taken into account for each employee is capped at $200 per day and $10,000 for all calendar quarters. If the credit exceeds the employer’s total liability for any calendar quarter, the excess credit is refundable to the employer.
Emergency Paid Sick Leave (EPSL) Credit
This is a 100% refundable tax credit for employers, equal to 100% of qualified paid sick leave wages required to be paid by the Emergency Paid Sick Leave Act that are paid by an employer for each calendar quarter through the IRS Form 941. The tax credit is allowed against the tax imposed by section 3111(a) of the Internal Revenue Code (the employer portion of Social Security taxes). This credit is capped at $2,000 or $5,110, depending on the sick leave taken by the employee.
Claiming an exemption for employers with less than 50 employees
Employers with less than 50 employees may elect an exemption to the EPSL and EFML if it would jeopardize the viability of the business as a going concern. To elect this small business exemption, a business should document why its business with fewer than 50 employees meets the criteria set forth by the Department, which will be addressed in more detail in forthcoming regulations.
Special Considerations for Self-Employed Individuals
Self-employed individuals may only take into account those days they are unable to work for qualified reasons under the Emergency Family and Medical Leave Credit or the Emergency Paid Sick Leave Credit. They must maintain documentation to be prescribed by the Treasury to establish their eligibility for the credit.
Other Elements of FFCRA
- Unemployment insurance: Provides as much as $1 billion for emergency transfers to states in fiscal 2020 to process and pay unemployment benefits. Individuals in states with rising unemployment can qualify for an additional 13 weeks (20 in some states) of unemployment benefits.
- Increase in Medicaid funding: Provides states with a 6.2% Medicaid FMAP increase for all medical services for the duration of the public health emergency.
- Other provisions: Healthcare plans, including high-deductible health plans, are to provide for COVID-19 testing at no cost to the insured. This includes diagnostic testing, including visits to a provider, urgent care center or emergency room. There is also a waiver of Medicare, Medicare Advantage, Medicaid and CHIP cost sharing.
Actions Employers Can Take Today
Employers may be eligible, depending on the direct or indirect impact to their employees, for up to a total of $10,000 for EFMLA, and up to $2000 or $5110 for sick leave in tax credits for employees that are on emergency or sick leave. Employers must accurately capture the hours and corresponding pay for each type of leave in order to calculate and capture the tax credit. Payroll providers can help establish time codes to assist with this process.